THE EPISODE WAS REMINISCENT of the old stories about Japanese soldiers hidden away in jungles on far-off Pacific islands who never learned that World War II had ended. Late last year, three middle-aged Washingtonians were arrested by the FBI and charged with having served as East German spies for nearly two decades.

Back in the mid '70s, the three had met in the campus chapter of the Communist Party's
youth movement at the University of Wisconsin. By 1997, Theresa Squillacote was a
Pentagon attorney. Her husband, Kurt Stand, was a left-wing labor activist who'd helped
John Sweeney unseat AFL-CIO chief Lane Kirkland. Their college pal, James Michael
Clark, was a private investigator.

The bureau learned about the trio's espionage activities by analyzing captured Stasi
(East German intelligence) files. The CIA gained access to the documents after East
Germany's collapse. But developing a solid case against the three required additional
evidence. Happily, thanks to the trio's seemingly desperate need to continue spying --
even after the fall of the Soviet Empire -- the FBI was able to carry out a successful
"sting" operation.

Squillacote had embarked on an astonishingly indiscreet effort to secure a new
espionage gig: She contacted a South African Communist serving in the Mandela
government in order to volunteer as a spy. By this point, however, the "Wisconsin
Three" were under full-scale FBI surveillance. Thus, FBI agents posing as South African
officials learned about the ring's entire espionage career from Theresa Squillacote
herself.

The arrests didn't receive a great deal of media attention -- for reasons that aren't
difficult to understand: The Cold War, after all, is over;
moreover, it's not clear that anyone in this merry band of misfits was ever in a position to do much damage to U.S. security. And the Keystone Cops
manner in which Kurt, Terry and James conducted themselves makes it hard to take
them seriously. A driving need to serve the Communist movement by passing classified
information to someone (anyone) suggests that these leftover radicals without a cause
may well be -- in their own bizarre way -- deranged.

Such coverage as was devoted to the case focused on
internecine turf battles within the intelligence community: For five years, the CIA refused
to grant the FBI access to the Stasi archive. Only the threat of an obstruction-of-justice
indictment, targeted at a ranking Germany-based CIA official, led the agency to rethink
its position.

But dismissing this episode as comedy ignores an important issue: government
security clearances. Squillacote -- a senior procurement analyst in the Office of the
Deputy Under Secretary of Defense for Acquisition Reform (only under Bill Clinton
could such a job even exist) -- had high-level clearances until the day of her arrest.
Clark, likewise, had, in the past, been granted clearances; he was employed for a time
by a firm that did contract work for the Pentagon. (Interestingly, Clark's application for a
CIA job was rejected for "security" reasons. But whatever the agency learned didn't
affect the careers of his comrades.)

Only Kurt Stand -- a "red diaper baby" whose father joined the American Communist
Party after fleeing Nazi Germany -- never sought access to classified information by
way of a government job. And Stand, who actually organized the ring (prior even to
marrying Squillacote), was probably told by the East Germans that working in the
then-anti-Communist labor movement -- and passing on AFL-CIO-related information --
would best serve East Berlin's needs.

How did Theresa Squillacote -- a campus leader of the Communist Party's youth arm
who never bothered to conceal her views -- ever secure any
sort of clearance? This is the key question.

This woman -- who'd married the son of an open Communist, traveled regularly through
the Soviet Bloc and even named her children Rosa and Karl (after the German
Communist "martyrs" Rosa Luxemburg and Karl Liebknecht) -- was hired after her
graduation from Washington, D.C.'s, Catholic University Law School by the National
Labor Relations Board. Subsequently, she secured a post as a House Armed Services
Committee staff attorney.

It seems that Squillacote's father -- a Milwaukee-based NLRB official -- was friendly
with the late Les Aspin, the committee's chairman. But the notion that this circumstance
might facilitate a security clearance for a public Communist -- while the Cold War was
still in progress -- boggles the mind.

During the Clinton administration, things got even worse. After receiving yet another,
higher clearance, Squillacote went to work at the Pentagon itself. Apparently, she did
her job well: In 1995, in fact, Terry received a "Reinventing Government" award from
Vice President Al Gore. To this day, it's well to note, she remains a member of the
Committees of Correspondence (Washington, D.C., chapter). The "Committees" reflect
the schism within the American Communist Party that attended the Soviet Union's
demise. The Communists who created this faction were dissatisfied with the Stalinoid
leadership of longtime CPUSA General Secretary Gus Hall.

It's hard to believe that background checks on Clark and Squillacote didn't reveal their
political orientation. Either such investigations aren't done in a remotely serious way, or
those conducting them -- at the FBI or the Defense Intelligence Agency -- have been
instructed not to consider Communist affiliations a legitimate impediment to the
granting of clearances. In short, the responsible parties either didn't know or didn't care.

The same can be said of Kurt Stand's employers -- AFL-CIO labor unions. An ex-head
of the CP's youth arm at the University of Wisconsin, whose ideological sympathies
never changed, couldn't possibly have occupied key union posts under Lane Kirkland.

Ironically, the arrest of the "Wisconsin Three" comes just as newly declassified
documents, released in Moscow and in Washington, demonstrate beyond doubt that
the CPUSA was a wholly-owned subsidiary of the Soviet Union as well as an
espionage-recruitment pool.

The likely answer to the question of why Squillacote and Clark received security
clearances? "Didn't care."

Ever since President Carter, two decades ago, declared that Americans had finally
overcome their "inordinate fear of Communism," the message has been clear:
Penalizing job applicants for harboring Communist sympathies is, effectively, a
manifestation of "McCarthyism." An, in recent years, of course, McCarthyism -- at least
in official Washington -- has been deemed a crime worse even than treason.

What's revealed in this unhappy episode is the fact that this world view has infected
even the agencies responsible for protecting national security.